Emanuel on pension veto: 'Rauner just told every Chicago taxpayer to take a hike'

Mayor Rahm Emanuel on Friday lashed out at Gov. Bruce Rauner for vetoing a measure aimed at providing city police and fire pension relief, accusing his onetime vacation pal of telling "every Chicago taxpayer to take a hike."

Rauner's move came as lawmakers left Springfield for a brief holiday weekend break, with Democratic leaders unable to agree on whether to send the governor a short-term or long-term budget as the administration threatened to veto either with Tuesday's spring session adjournment looming.

But it was the governor's late-afternoon thrashing of Emanuel's long-sought pension bill that caused the biggest stir. Lawmakers approved the bill a year ago Monday, but they didn't send it to Rauner until late March out of fear he would veto it amid the partisan stalemate over the state budget.

Over the short term, the bill would have reduced how much taxpayers contribute to the retirement funds by hundreds of millions of dollars a year. But that delay would come at a cost of billions of dollars over the long haul. By paying less upfront, the city would see its pension debt continue to grow.

With the clock counting down on his 60 days to act, Rauner got out his veto pen.

"This bill continues the irresponsible practice of deferring well into the future funding decisions necessary to ensure pension fund solvency," Rauner wrote in his veto message to lawmakers. "The cost to Chicago taxpayers of kicking this can down the road is truly staggering."

Emanuel was ready, quickly releasing a blistering statement that ripped his onetime vacation friend for "an unspeakable act of disrespect toward our men and women in uniform."

"With a stroke of his pen, Bruce Rauner just told every Chicago taxpayer to take a hike. Bruce Rauner ran for office promising to shake up Springfield, but all he's doing is shaking down Chicago residents, forcing an unnecessary $300 million property tax increase on them and using them as pawns in his failed political agenda," Emanuel's statement read. "Decades from now, the Rauner Tax will be this governor's legacy in Chicago. His veto is harmful to taxpayers, and like everything he does, it is contradictory to his own supposed policy positions. It's no wonder no one can trust him."

Rhetoric aside, Rauner's move leaves Emanuel with some work to do. If he can't get legislators to override the veto, he'll have to come up with an additional $220 million before year's end and nearly $1 billion over the next four years. That would require the city to "identify a new revenue source" — meaning higher taxes, fines or fees — according to a handout that city financial officials recently gave to aldermen.

Aldermen could have a tough time summoning the will to hit up taxpayers again after approving $755 million in new fines, fees and taxes last year. That included a $543 million property tax increase, the biggest in modern city history, to cover future contributions to the police and fire pension funds.

It could be equally tough for Emanuel to secure the three-fifths vote in the General Assembly needed to overturn Rauner.

The measure cleared the Senate with a veto-proof majority, but it was six votes short of the 71 needed to override in the House. Four House Democrats who are potential Republican targets this fall voted against the bill, and another four House Democrats were absent that day. In addition, one of the two House Republicans who voted in favor is no longer in the legislature.

Emanuel can try to make the case that an override would spare taxpayers some immediate pain, even if stretching out the payments as proposed in the legislation would result in much higher overall taxpayer contributions to the two underfunded retirement accounts. If that fails, he has to start figuring out how to cover the additional cost.

Under the legislation, the city would have had until 2055 to bring the assets of the pension funds to 90 percent of what's needed to cover benefits. The police and fire retirement funds are short about $11.6 billion of what's needed to cover future payouts. Without the bill, the city had until 2040, which would have jacked up annual costs over the short run and come on top of a host of other near-term financial problems.

Emanuel already is considering asking the City Council to authorize an additional $175 million property tax increase for Chicago Public Schools to cover its teacher pension payments. He's also looking for ways to restore health to the city largest pension system for municipal workers that could easily increase taxpayer costs by upward of $500 million a year.

The veto capped a day that began with a private meeting between Rauner and legislative leaders but quickly devolved into the same partisan finger-pointing that has marked the nearly yearlong stalemate at the Capitol. It left Emanuel to joke about locking lawmakers atop the new Navy Pier Ferris wheel without a bathroom break until they figure it out.

Senate President John Cullerton, facing trouble persuading his Democratic supermajority to jump on board a full-year, $7 billion-short spending plan muscled through the House by Speaker Michael Madigan, tried to talk the other leaders into a short-term budget instead. But Madigan turned thumbs down on the idea, as did the Republicans, who accused Democrats of trying to drag out the stalemate until after the November election.

"This is so predictable," said Senate Republican leader Christine Radogno of Lemont. "They've walked us to the brink, they've slow-walked the negotiations. ... I believe they've purposefully slow-walked this to create a crisis. We've seen this playbook over and over again."

Cullerton fired back that a short-term spending plan is "a practical way forward, given reality."

"We remain fully committed to the working groups, but the reality is that we need revenue with reforms to have a balanced budget, and it is the end of May," Cullerton said in a statement. "If we run out of time, we have no backup plan to keep our state operating."

While Republicans said Democrats had "pulled the plug" on negotiations for a larger bargain on the budget, another leaders' meeting has been set for Sunday, and Rauner said working groups of legislators will continue talks through the weekend. The House and Senate will take Saturday off before returning to Springfield on Sunday.

The sticking point is the same as it's been during the yearlong stalemate: The first-term governor is holding firm on his stance that he won't agree to a tax increase to help balance the budget unless it is accompanied by a series of items from his "turnaround agenda." Rauner, a former private equity investor aligned with business interests, says cost-cutting changes in worker's compensation and allowing local governments to limit what gets collectively bargained would help spark the state's sluggish economy.

For weeks, groups of rank-and-file lawmakers have been meeting on those topics. But Madigan, backed by organized labor and the trial lawyers, has argued that those ideas would hurt the middle class. On Friday the speaker said Rauner "continues to fail to persuade" on those issues.

Rauner himself kept largely out of the fray but vowed to "never give up" on his legislative wish list. He gave a short statement after the leaders' meeting, calling on rank-and-file lawmakers to stand up to Democratic leaders who are less inclined to cut a deal.

"We have the time, we should stay focused, stay disciplined, don't get distracted by other things, don't do Band-Aids, don't do unbalanced budgets, don't kick the can, don't make promises that we're not going to honor," the governor said.

A version of this article appeared in print on May 28, 2016, in the News section of the Chicago Tribune with the headline "Mayor blasts pension veto - `Rauner just told every Chicago taxpayer to take a hike,' Emanuel statement says" —
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